AMD is buying a rival chipmaker for $35 billion

AMD is buying a rival chipmaker for $35 billion.

The coronavirus pandemic has forever changed the microchip industry, kicking its consolidation into high-gear as people rely more on massive data centers to host their video conferences and other productivity services. Capping off a year of massive change for semiconductors, AMD agreed to buy rival chipmaker Xilinx in a $35 billion deal.

The two companies announced Tuesday that the all-stock transaction will create the industry's largest high-performance computing company and further bolster AMD's growing portfolio. Combined, it will have 13,000 employees with the deal expected to close at the end of 2021.

Together, the companies are hoping to further establish itself against Intel and other rivals as demand booms for chips needed for computers, cars and aerospace.

"Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry's high performance computing leader and partner of choice for the largest and most important technology companies in the world," AMD CEO Dr. Lisa Su said in a statement.

Shares of AMD fell in 5% in premarket trading, while Xilinx stock soared 10%.

It's the latest and largest move under Su, which has reversed AMD's declines since taking over in 2014. Since she became CEO, the company's shares are up more than 1,300%, despite the fact that AMD, like many tech companies, has taken hits from the US-China trade war and, more recently, from disruptions caused by coronavirus.

AMD also released earnings early Tuesday, reporting a 56% jump in sales to $2.8 billion. "Strong customer momentum drove our fourth straight quarter of greater than 25% year-over-year revenue growth," the company said.

The acquisition marks the latest big tie-up in the rapidly consolidating semiconductor industry.

Earlier this month, Intel sold part of its memory chip business to SK Hynix for $9 billion in a deal that would make the South Korean company the world's second biggest flash memory chipmaker. And Nvidia, known mainly for making chips for video game graphics, announced recently that it would acquire UK-based chip designer Arm for $16 billion.

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